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17 Nov 2014

Labour Market Outlook: pension auto-enrolment

An examination of the progress and impact of pension auto-enrolment in the workplace

Our survey of the progress of pension automatic enrolment in the workplace finds that employers are going above and beyond what is legally required. Of the 1,080 employers surveyed, 68% have automatically enrolled eligible workers into a pension scheme. The average employer contribution to the pension schemes of newly enrolled workers is 5.6% of salary and the average employee contribution is 4.7%, while the legal minimum is 1% each.

Among those who have yet to go through auto-enrolment some are predicting negative consequences of the pension changes, in terms of employment and pay. However, of those who have already gone through automatic enrolment, 22% report that there are no significant extra costs, while 38% report that they have been able to absorb the additional expense. By contrast, 14% restricted or stopped wage growth while 13% scaled back on hiring or reduced staff numbers in response to the pension reforms.

"... those private sector companies that have adopted a ‘high-road’ business strategy are more likely to have higher contributions and lower opt-outs as well as being more likely to review default pension charges and default suitability. "

Episode 83: With nine million employees set to be enrolled in a pension scheme over the next year, this episode looks at what SMEs can learn from the larger companies that have already implemented auto-enrolment.